Law: Financial Institutions (Recovery of Finances) Ordinance, 2001

Section: 10,16,19

Law: Contract, Act, 1872

Section: 151,152,172

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--- ----Ss. 10, 19 & 16---Contract Act (IX of 1872), Ss. 151, 152 & 172---Suit for recovery---Execution of decree of Banking Court---"Pledge of goods" for obtaining of finance facility from Bank---Pledgee-Bank only having constructive possession of goods---Theft /loss of pledged goods--- Role of muqadam appointed by Financial Institution/Bank---Plaintiff Bank sought to recover finance provided to defendant which was secured against pledge of stocks, and such stocks were stolen from premises of defendant---Contention of defendant, inter alia, was that plaintiff could not recover such finance if pledged stocks could not be returned to defendant on account of theft---Validity---Goods/stocks, in the present, case remained in exclusive ownership and possession of defendant who did not deliver goods in possession of plaintiff Bank but rather gave access plaintiff Bank's muqadam---Muqadam wielded little control of pledged goods and had no obligation or role in security of same and therefore duty of care of plaintiff Bank was diluted when viewed in context of duty to secure stocks against theft---Per S. 151 of the Contract Act, 1872 it was duty of bailee to take care of goods bailed to him and standard duty was cast upon bailee to take such care of bailed goods as man of ordinary prudence would---Such standard was uniform in nature and encompassed all contracts of bailment and pledge was a specie of bailment where goods were given in possession of pledgee as security for repayment of loan---In the present case, possession of plaintiff Bank could only be termed as constructive or notional in view of fact that warehouse/godown in which stocks were stored were situated on site of mills of the defendant/customer---Defendant's employees were guarding said premises and plaintiff Bank's muqadam had no power to stop a robbery/theft at premises--- High Court observed that plaintiff Bank was under no higher duty of care to take care of pledged stock than defendant in whose premises the same were lying and where the robbery took place and thus plaintiff Bank could not be held to be at fault and it could not…

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